Cortec Group has completed its sale of Cortland Cos. to Actuant Corp. (NYSE: ATU) for approximately $230 million. Cortland is a Cortland, N.Y.-based maker of electro-mechanical cables and umbilicals, synthetic ropes and steel cable and assemblies. Harris Williams advised Cortland on the deal, while Morgan Stanley advised Actuant.
Cortec Group, Inc. (“Cortec Group”), a New York based private equity firm which invests in lower middle-market manufacturing, value-added distribution, and proprietary service businesses, is pleased to announce that on September 26, 2008 its affiliate, Cortec Group Fund III, L.P. (“Cortec Fund III”), sold The Cortland Companies, Inc. (“Cortland”) to Actuant Corporation (“Actuant”), (NYSE:ATU), a diversified industrial company, for approximately $230 million.
Cortland is a global designer, manufacturer and distributor of custom-engineered electro-mechanical cables and umbilicals, high performance synthetic ropes and value-added steel cable and assemblies. Cortland’s products are utilized in critical applications in diverse end markets including offshore oil and gas, marine geophysical survey, commercial diving, marine transport, medical, security, defense and aerospace. With five facilities across three continents, Cortland is expected to generate approximately $100 million in revenue this calendar year.
Cortec Fund III purchased Sanlo, Inc. (“Sanlo”) (currently a Cortland subsidiary) in 2004 and made an additional equity investment in 2007 to complete the acquisition of certain Cortland entities. Both acquisitions were sourced on a proprietary basis. As a result of the sale, Cortec Fund III will generate nearly a 9x return (a 70% IRR) on its investment.
As with most of its platform companies, Cortec’s investment thesis for Sanlo was to buy a good business with transition issues and help it grow organically and through acquisition. “At the time of our purchase, Sanlo had no CEO or CFO, limited systems and a culture in need of change. We recruited new senior management from outside the industry, invigorated organic growth, opened a Chinese fabrication facility, and completed and integrated the Cortland add-on acquisition”, said Jonathan Stein, Senior Managing Director at Cortec Group. “As a result of expanding its served markets and securing new customers, over the past few years the combined company grew EBITDA organically at nearly a 25% compound annual rate. Cortland’s strong growth, proprietary products, diversified markets and excellent return on capital made the company a very attractive acquisition target”, added Mr. Stein.
John Stidd, Cortland’s CEO stated, “Cortec facilitated our rapid growth across the globe. We knew we had the opportunities to pursue, but Cortec helped us more effectively prioritize, plan, fund and execute our expansion initiatives and enabled us to reach our potential much faster.” David Schnadig, a Partner at Cortec Group, commented, “we are extraordinarily pleased with the results of our investment in Cortland. The success of our management in growing Cortland aggressively created tremendous shareholder value in a relatively short period of time.”
Cortland was advised on the transaction by Harris Williams & Co. and DLA Piper LLP.
About Cortec Group
Cortec Group acquires high value-added, middle-market manufacturing, distribution, healthcare, and proprietary service businesses with leadership positions in their market niches. Cortec Group manages approximately $750 million of committed capital which it uses to acquire platform companies with enterprise values of $30 million to $250 million as well as smaller follow-on acquisitions. Additional information about Cortec Group can be found at www.cortecgroup